April 7, 2008 / 3:31 PM / in 10 years

Fidelity launches mutual fund allowing short sales

BOSTON, April 7 (Reuters) - Fidelity Investments, the world’s biggest mutual fund company, said on Monday it has launched its first fund for retail investors that can sell stocks short as well as hold them long.

Fidelity said in a statement it launched the “130/30 Large Cap Fund” to meet growing demand from retail investors and advisers for these strategies that are normally used by institutional investors.

Mutual funds of Fidelity and other firms generally take long positions, in which investors buy and hold stocks. But the ‘130/30’ strategies allow the funds to take some short positions, in which investors borrow shares to sell with the expectation they can be bought back at a cheaper price.

Legg Mason Inc (LM.N), Vanguard Group and others have already launched mutual funds that involve some form of shorting, a technique normally used by hedge funds.

    “Investors... are expressing interest in funds that adopt institutional-like strategies for achieving attractive risk-adjusted returns,” Sanjiv Mirchandani, president of Fidelity Personal and Workplace Investing Growth Business, said in the statement.

    The 130/30 Large Cap Fund will be managed by Keith Quinton, who said in the statement Fidelity has a long track-record in taking short positions.

    “Fidelity has a more than 15-year record in shorting via portfolios available to institutional clients,” Quinton said.

    Boston-based Fidelity managed $1.5 trillion in assets as of end-February. (Reporting by Muralikumar Anantharaman; Editing by Derek Caney)

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